ITV News Politics Editor Robert Peston reports on the government's latest settlement
The Office for Budget Responsibility (OBR) assessment of the sustainability of the UK government's debt is off-the-charts alarming.
It paints a picture of shocking Treasury incompetence over the past 15 years in managing the debt burden - which has left the UK's public finances much more exposed to rising inflation than any other comparable country.
1 - Quantitative Easing has turned a third of government liabilities into overnight debt at floating rates.
2 - the UK has borrowed twice as much in the form of inflation-linked bonds than any other government.
and 3 - the proportion of government bonds in flighty foreign hands is the second highest among G7 rich nations.
One immediate consequence is that what the government pays to borrow - the yield on ten-year debt or gilts - has risen by 2 percentage points, compared with a G7 average of just 0.5 percentage points over the past 12 months.
In the OBR's words, "the rise in global interest rates has fed through to the UK's debt servicing costs more than twice as fast as in the past or elsewhere".
And we have the wrong kind of inflation, in the sense that compared with other countries, nominal GDP or national income isn't rising fast enough to offset the increase in the nominal debt burden, and wages aren't rising fast enough to generate additional tax revenues.
As the OBR says, UK general government debt is forecast to rise by 3.1 per cent of GDP this year, compared with average falls of 1.8 per cent in other European countries.
So, the obsession of Jeremy Hunt and Rishi Sunak with defeating inflation is understandable - because in the absence of any significant fall in inflation, there is a risk that investors will shun UK government debt.
Then interest rates for the government and for all of us would then rise to crippling levels.
This parlous debt backdrop explains why the Bank of England and the Treasury are prepared to risk recession to bring down inflation.
It is what you need to know ahead of the imminent announcement of how the government will fund pay rises for teachers, nurses and other public servants.
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